40% on gas and electric bills

Families could be paying a quarter more for their gas as early as this summer, experts have warned.

Wholesale gas prices are already at a record high for this time of year. As investment bank Goldman Sachs predicts crude oil will rise to $200 a barrel from the current high of $123, household budgets look set to feel the strain.

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It will heap pressure on families already struggling with average increases of around 15 per cent by the big energy firms since January.

Aamir Baloch of energyhelpline.com said: “If the predicted 67 per cent increase in crude oil prices does happen, wholesale gas prices will increase substantially too, as there’s a strong link between the two. 

“This will add pressure to domestic energy prices. Annual bills will reach new heights, at £1,300 for a typical home.”

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Joe Malinowski of TheEnergyShop.com said: “I think we could be seeing another 30 to 50 per cent on the price of a domestic bill. It would be catastrophic.”

He predicts householders will see a 25 per cent increase in their gas prices and 10 per on electricity as early as summer. 

Rob Laughlin, energy broker at MF Global, said crude rises “would have a severe effect on every consumer”. And Tim Wolfenden of  uSwitch.com said high wholesale prices would mean domestic gas bills rising by around 25 per cent this winter. 

“We will see price increases earlier than predicted this year, maybe September and maybe another in the first quarter of next year,” he said. “I think it will add up to 25 per cent overall.”

Wholesale gas prices are closely linked to wholesale oil costs – partly because they are often produced from the same reservoir. Electricity bills suffer as well as gas bills because around one-third of Britain’s power generation is gas-fired. 

Centrica, parent company of the UK’s biggest energy firm British Gas, said wholesale gas prices for the coming winter were now at an average 85 pence per therm.

That price is up 77 per cent on last winter’s average and a 26 per cent hike from January’s 61p per therm. “These are the highest prices the UK has seen in the run-up to winter,” a Centrica spokesman said. 

Centrica warns that the UK is increasingly reliant on gas imports from Europe and further afield because North Sea gas is running out.

“We’re having to import from Europe, where there is almost no competition in gas and power markets to drive prices down, and this is pushing UK prices up,” the spokesman added. Wholesale gas prices make up around half suppliers’ costs. Transport, billing and other company costs make up the rest. 

Energy information provider Platts said wholesale gas prices in the UK are up 41.8 per cent since the start of 2008. This relates to current prices rather than the forward-looking winter prices quoted by Centrica.

Crude oil has surged in price because investors are putting their money into commodities while the dollar is weak. Concerns about supply disruptions in Nigeria and the Middle East plus demand from fast-growing nations such as China and India have sent oil prices soaring to record levels on the global markets. Crude hit 123 US dollars per barrel yesterday before dropping back. 

Oil prices are now up more than 25 per cent from the start of the year and have nearly doubled from about $62 a barrel a year ago.

Goldman Sachs analyst Arjun Murti wrote in a report the world was in the midst of a “super spike” in oil prices that will ultimately force demand to fall sharply. “We believe the current energy crisis may be coming to a head. A ‘super-spike’ endgame may be in the early stages of playing out,” he wrote.

Britain imports 20 per cent of its gas supplies. This is predicted to rise to around 75 per cent by 2015 due to dwindling North Sea reserves, making domestic fuel bills even more sensitive to global wholesale prices.